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STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
GERTZ PLAZA
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. HL410113RO
61 HAMILTON PLACE CORP. : DRO DOCKET NO.FF510027R
TENANT: JOY JACKSON
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On December 22,1993, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
November 19, 1993, by the Rent Administrator, 92-31 Union Hall
Street, Jamaica, New York, concerning the housing accommodations
known as 61 Hamilton Place, New York, New York, apartment no. 52,
wherein the Rent Administrator determined that the owner had
overcharged the tenant.
The Administrative Appeal is being determined pursuant to the
provisions of Section 2522.4 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order was
warranted.
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant to
the issue raised by the administrative appeal.
This proceeding was commenced by the tenant's filing of an
overcharge complaint on June 7, 1991. The tenant stated that she
had taken occupancy of the subject apartment on August 1, 1990
pursuant to a one year lease at a monthly rental of $975.00. The
tenant stated that she believed she was being overcharged because
the prior tenant had been paying $370.00.
In answer to the complaint, the owner stated that the rent
being charged was based upon applicable guidelines increases, a rent
increase for Major Capital Improvements (MCI) and individual
apartment improvements at a total cost of $24,736.40. The owner
submitted invoices and cancelled checks in support of its claimed
improvements costs.
In reply, the tenant disputed that the owner had made all
improvements at the cost alleged, specifically denying that the
front door or the faucet had been replaced or that new walls had
been installed but confirming that the owner had installed new
cabinets, a new stove, sink, stove hood and refrigerator. Both the
tenant and the owner requested an inspection to confirm their
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assertions. A physical inspection of the subject accommodations was
conducted by a DHCR employee on June 1,1993.
The inspector was requested to verify the installation of
various items which had been included in the owner's claim,i.e. a
new bathroom door and lock, new dining room wood floor, ceramic
tiles in the kitchen, a new front door, a new bathtub, a new Delta
faucet and new light fixtures in the living room. In contradiction
of the owner's claim, the inspector reported that the following
items did not appear new: living room light fixture and the front
door. Although the faucet appeared new, it was not a Delta faucet
as had been alleged by the owner but was manufactured by Camco. The
inspector was unable to determine whether the bathroom door and lock
had been newly installed in 1990. The inspector stated that only a
section of the dining room floor near the radiator had been replaced
rather than the whole floor as claimed by the owner as the floor
boards were of a different pattern than the original
floor but that the bathtub appeared new.
In the order issued on November 19, 1993, the Rent
Administrator determined that the owner had proved the cost of the
installation of new equipment totaling $17,062.00, entitling the
owner to a rent increase of $426.55. The owner's claim for a new
door and a new Delta faucet was disallowed as not substantiated by
the physical inspection. Since the owner could not provide a cost
breakdown of the invoice documenting the disallowed faucet, the
entire invoice was disallowed. The Administrator further noted that
the owner was not permitted an increase for painting the apartment.
The Administrator established the collectible rent at $972.92
effective January 1,1993 and directed the owner to refund an
overcharge of $15,214.54 inclusive of treble damages and excess
security.
In its appeal, the owner contends that the Administrator's
order should be revoked on the following grounds: 1) even though
the owner did not take an increase for painting, the order claimed
that such cost had been included in the rent increase; 2) based
upon an inspection conducted three years after the alleged
installation, the Administrator incorrectly disallowed a rent
increase for certain improvements; 3) the owner submitted proof of
the installation of a new faucet which while not a Delta brand
faucet was a delta faucet in style; even if the faucet were not to
be permitted, the remainder of the invoice should not have been
disallowed; 4) the owner submitted all required documentation for
the rent increase taken so that no overcharge should have been
found; 5)treble damages should not have been assessed because the
owner demonstrated that it had paid for all improvements installed
and had submitted full documentation for the improvements alleged
and that there was no willful overcharge.
The Commissioner is of the opinion that this petition should be
denied.
Section 2522.4 of the Rent Stabilization Code permits an owner
to increase the rent by 1/40th the cost of qualified improvements
made by the owner with the consent of the tenant. Improvements made
during a vacancy period do not require tenant consent. To overcome
a tenant challenge to such a vacancy increase, an owner must
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establish, that the claimed improvements were actually accomplished
at the cost on which the rent increase was based, by tenant
affirmation or DHCR inspection and the submission of documentation
(invoices and proof of payment) detailing the nature of the
qualifying improvement and its actual cost. The cost of work
considered to be ordinary maintenance and repair does not qualify
for an improvement rent increase.
Review of the record reveals that the documentation submitted
in support of the claimed rent increase included invoices and
cancelled checks for which no cost itemization was provided,
including $6000.00 for a variety of floors, $5141.88 to Lorenzo
Sanabria Maintenance for new bathroom plumbing, new kitchen cabinets
new sink and Delta faucet, new gas line etc., $3255.00 for
installation of various electrical outlets, switches and other
electrical work, $7500.00 of which $500.00 was specifically denoted
as painting the entire apartment to renovate and restore the
apartment walls. Despite the opportunity to do so, the owner did
not provide a breakdown so that the Administrator could sort out the
improvements which qualified for a rent increase from the non-
qualifying work. The Commissioner notes that based on the owner's
failure to provide the cost breakdown, the Administrator disallowed
only one invoice in total, the one containing a Delta faucet which
proved not to have been installed. Although the flooring invoice
showed the installation of a new dining room floor, the inspection
report indicated that the floor was only repaired. The
Administrator allowed the full amount of the invoice which included
the new flooring although the physical inspection indicated the
dining room floor was not new but that repairs had been made. Since
the tenant did not file her own appeal, the Commissioner will not
disturb the amount approved by the Administrator for flooring.
Invoices that give only a total cost without any specifcation tend
to obfuscate and inflate the actual cost of items, while denying the
examiner the ability to exclude those items which do not qualify.
Parenthetically, it is noted that the contractor on the suspect
invoice, Lorenzo Sanabria, affirmed in an affirmation submitted by
the owner that the cost of the job that was done was only $3,141.88
rather than the $5,141.88 previously claimed. The Commissioner
notes that the owner insisted in the record before the Administrator
that it had installed a Delta faucet. The invoice unequivocally
referred to a Delta faucet. That the faucet that was in place at
the time of the inspection was not a Delta tends to taint the
documents submitted by the owner, especially when the owner cannot
provide a breakdown of the large sums submitted.
The Administrator correctly disallowed the $500.00 cost of
painting, which was included in the $7500.00 invoice, from the
permitted rent increase. The Commissioner notes that the physical
inspection of the subject premises was conducted at the express
request of the parties and that the Rent Administrator can rely on
the inspector's findings.
The Commissioner finds that the imposition of treble damages
was warranted in the instant matter. Included within the total
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amount allegedly spent for qualified individual apartment
improvements were amounts that did not qualify: $807.00, a
duplication of an amount that was allowed; $800.00 for floor sanding
and sealing, ordinary maintenance and repair; $500.00 for painting;
$425.00 for a door whose installation was not supported by a
physical inspection and $5141,88, the invoice disallowed as suspect.
Further, as previously pointed out, the owner was allowed a rent
increase for the installation of a new dining room floor which was
not supported by the physical inspection report. Items consisting
of ordinary repairs and maintenance and items shown by inspection
not to have been done. as in the instant case, cannot be considered
the same as improvements done in an apartment but whose cost cannot
be substantiated by the owner thereby eliminating treble damages on
any resulting overcharge. Accordingly, the Commissioner finds that
the owner has not demonstrated that the overcharge was not willful
in this case and that the imposition of treble damages was
warranted.
The owner is directed to reflect the findings and
determinations made in this order on all future registration
statements, including those for the current year if not already
filed, citing this order as the basis for the change. Registration
statements already on file, however, should not be amended to
reflect the findings and determinations made in this order. The
owner is further directed to adjust subsequent rents to an amount no
greater than that determined by this order plus any lawful
increases.
The Commissioner has determined in this Order and Opinion that
the owner collected overcharges of $15,214.54. This order may, upon
expiration of the period for seeking review of this Order and
Opinion pursuant to Article Seventy-eight of the Civil Practice Law
and Rules, be filed and enforced as a judgment or not in excess of
twentry percent per month of the overcharge may be offset against
any rent thereafter due the owner. Where the tenant credits the
overcharge, the tenant may add to the overcharge, or where the
tenant files this Order as a judgment, the County Clerk may add to
the overcharge, interest at the rate payable on a judgment pursuant
to section 5004 of the Civil Practice Law and Rules from the
issuance date of the Rent Administrator's Order to the issuance date
of the Commissioner's Order.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that this petition for administrative review be, and
the same hereby is, denied, and, that the order of the Rent
Administrator be, and the same hereby is, affirmed.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
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